© Reuters. FILE PHOTO: A Chinese national flag flutters at the headquarters of a commercial bank on a financial street near the headquarters of the People’s Bank of China, China’s central bank, in central Beijing November 24, 2014. REUTERS/Kim Kyung-Hoon/File Photo
MCO
-0.74%
Add to/Remove from Watchlist
Add to Watchlist
Add Position
Position added successfully to:
Please name your holdings portfolio
Type:
BUY
SELL
Date:
Amount:
Price
Point Value:
Leverage:
1:1
1:10
1:25
1:50
1:100
1:200
1:400
1:500
1:1000
Commission:
Create New Watchlist
Create
Create a new holdings portfolio
Add
Create
+ Add another position
Close
(Reuters) – Ratings agency Moody’s (NYSE:MCO) cut its outlook on China’s government credit ratings to negative from stable on Tuesday, in the latest sign of mounting global concern over the impact of surging local government debt and a deepening property crisis on the world’s second-largest economy. [L1N3D00G9]
COMMENTS:
JAKOB EKHOLDT CHRISTENSEN, SENIOR EM STRATEGIST, BANKINVEST, DENMARK
“From Moody’s side, what’s challenging is the lower growth perspectives, both in terms of the debt overhang that’s weighing on economic growth potential, but also foreign investors pulling out of China and the tightening of U.S. sanctions.”
WIN THIN, GLOBAL HEAD OF CURRENCY STRATEGY, BROWN BROTHERS HARRIMAN, NEW YORK
“We have been expecting downward pressure on the sovereign rating after the PBOC finally acknowledged earlier this year that China’s debt to GDP ratio was approaching 300%. Moody’s last downgraded China’s sovereign rating in 2017 to A1 vs. Aa3 previously due to the rising debt load.”
ART HOGAN, CHIEF MARKET STRATEGIST, B RILEY WEALTH, NEW YORK
“We spent the better part of three years watching China have this sort of off and on reopening from the pandemic, and this was the year they finally sort of officially reopened. But the pace at which the economy has recovered from that has been disappointing. They’re doing everything they can to try to stimulate economic growth, but it just hasn’t worked yet.”
“It’s important to note that the second largest economy in the world struggling is likely going to affect the global economy. If they continue to struggle well into next year and aren’t able to find the right formula to stimulate the economic growth, it’s going to be a problem for the global economy and likely to be a headwind.”
CHRIS SCICLUNA, HEAD OF RESEARCH DIVISION, DAIWA CAPITAL MARKETS, LONDON:
“The market realises that China is reluctant to provide stimulus.
“So, China is data dependent and will only provide stimulus if there is not a recovery.
“I wouldn’t expect the Chinese authorities to respond to a foreign ratings agency’s actions.
“In a way, the move is a lagged indicator in terms of how markets have already reacted to China and foreign investors have taken an arms length approach to the country
“So this is a little bit behind the curve.”
VICTORIA SCHOLAR, HEAD OF INVESTMENT, INTERACTIVE INVESTOR, LEEDS, UK (email)
“Moody’s has cut China’s government credit rating to negative from stable. The ratings agency says this reflects the risks related to its persistently lower medium-term economic growth and ongoing downsizing of the property sector. It expects China’s annual GDP to come in at 4% in 2024 and 2025 and average 3.8% between 2026 and 2030. China’s finance ministry said it is disappointed by the downgrade and said Moody’s concerns are unnecessary.”
“China has struggled with a bumpier than expected post covid recovery. It has been grappling with weak demand, an embattled property sector, declining imports and exports, and heavy debts from long-term infrastructure spending. The government has stopped publishing youth unemployment figures, after they hit a record high in the summer. While the authorities have been attempting to bolster demand through stimulus measures, more needs to be done to support the world’s second largest economy particularly amid the backdrop of sluggish global demand.”
Source: Investing.com
